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The UK’s Job Subsidy Bill to Reach £100 Billion

The total bill for the jobs being subsidised by the British Government continues to grow, despite the moves being made towards the country’s lockdown ending. New reports show that 11 million jobs are currently being paid in this way.

The Full Details

These numbers come from an HMRC report. They say that the cost of propping up so many UK jobs has now hit £24 billion. It is feared that the final bill will pass the £100 billion mark.

This includes both workers on furlough and self-employed claims. HMRC state that an extra 300,000 workers were added to the furlough scheme in the last week. This has seen £2.5 billion added to the cost, as around 8.7 million workers are now on the scheme.

In terms of self-employed workers claiming support, this number rose by 200,000, to 2.5 million, in the last week. All of this means that the Government is paying for about a third of the country’s workforce. It should be remembered that many businesses are also using the debt collection process to survive through this testing time.

Claims so far have reached a combined total of £24.7 billion for both furloughed and self-employed claims. However, analysts now fear that the cost will keep rising until it hits £100 billion or more. Workers from 1.1 million businesses are currently on furlough, with the Government paying 80% of their salaries up to £2,500 per month.

What Happens Next?

These schemes are designed to keep people ticking over while they can’t get to work, and to avoid the nightmare scenario of mass redundancies from companies across the UK. The idea is that these workers then leave the schemes as the lockdown eases and people can get back to work again.

However, it is feared that some businesses are simply using the furlough payments as a temporary measure before making redundancies. This could mean that the country sees a wave of job losses once the scheme starts to wind down.

Chancellor Rishi Sunak has already pointed out that businesses need to start contributing to this scheme from August, as the Government looks to wind down their subsidies. From July, employees can start to work part-time without their furlough pay being affected.

In August, companies will need to start paying National Insurance for their employees and by October the furlough benefits are set to end. It is hoped that the economy is on the road to recovery by that time.

The self-employed scheme is set for one last month in July. This will see the average monthly income that can be claimed dropping from 80% down to 60%. Sunak called the UK’s schemes “amongst the most generous in the world” but admitted that they need to adjust so that those who can return to work do so.

Meanwhile, a group of senior bankers have warned that around 50% of the £18.5 billion granted in bounce back loans will probably never get paid back. They advised the Government to expect hundreds of thousands of small business to go under.